AT&T revealed on Thursday that the newly free-on-contract iPhone 3GS is seeing inventory sellouts across the U.S., and expects the device to broaden the company's smartphone base.

AT&T Mobility Chief Executive Officer Ralph de la Vega, in a Q&A session following the company's Q3 2011 earnings call, reported that supply of Apple's legacy model iPhone is running low, noting that it's bringing in more new subscribers on average than any other device. The 3GS, an AT&T-exclusive, is now being offered for free with a 2-year contract, however the carrier's online store is currently "out of stock."

"We've seen a tremendous, tremendous demand for that device even though it's a generation old," de la Vega said.

De la Vega sees his company's lower price devices as a "good entry point" for subscribers who want to add data services to their plans, and notes that the 3GS is an important factor in broadening the growing smartphone market.

"We continue to bring in more subscribers onto our network with pure data plans," de la Vega said. "18 million, or nearly half of our smartphone subscribers, are on tiered plans with most choosing the higher priced data plan."

The news comes after it was announced that AT&T had activated over 1 million iPhone 4S units on the device's launch day last Friday, making it the most successful iPhone debut in the company's history.

Combined, Apple's iPhone 3GS, 4 and 4S account for 56 percent of all smartphone activations on AT&T's network, however no specific numbers were given as to how many 3GS units have been activated since it became available as a free-on-contract device.